Cowen on Vaticanomics

In today's Wall Street Journal, Tyler Cowen has a piece, "Vaticanomics," in which he analyzes pieces of the Pope's latest encyclical letter, "Caritas in Veritate." He finds it less anti-market than many other commentators have. He doesn't provide enough detail to back up that claim (which, admittedly, is hard to do, given his word constraint), but he does provide enough to motivate me to read the long document for myself. A project for this weekend.

Tyler, on his blog, highlights some of his own statements in his piece, but I liked others more. In case readers of his blog haven't noticed--I think most of them have--Tyler has quite an ability to coin funny punchy paragraphs. My favorite two:

For all of its qualifications and talk about an ethical framework, the document endorses microfinance in two different sections. Keep in mind that many microfinance loans charge the borrower 50% or 100% interest a month and sometimes subject nonpayers to neighborhood intimidation; the church has come a long way from medieval usury laws.

It should be said that, despite moments of coherence, the encyclical is a sprawling mess that reads as if it was written by a bureaucracy that felt it had to mention everyone's concern. What does it mean to write: "The transition inherent in the process of globalization presents great difficulties and dangers that can only be overcome if we are able to appropriate the underlying anthropological and ethical spirit that drives globalization towards the humanizing goal of solidarity"? It sounds as if somebody has read Hegel.

Tyler's analysis does seem off in one important respect. In trying to assure us that it's not that anti-market, Tyler writes:

This is a fundamentally conservative piece of work. When President Obama meets with the pope tomorrow, we should not expect him to stand too far to the left of the president.

So let's get this straight. It's fundamentally conservative and, at the same time, the Pope is not "too far to the left" of Barack Obama. That means that the Pope is at least somewhat to the left of Barack Obama. So that would make Barack Obama even more fundamentally conservative, right?

Not sure about that. I think Obama might be more left than the Pope and in the context of the world as well. But I'm not sure that we can compare Obama and the Pope at all - it's an apples and oranges kind of thing.

See Terence Corcoran's article in Canada's Financial Post http://www.financialpost.com/opinion/story.html?id=4f44e123-e315-48f5-8db2-9c3cc8747c05 for a more honest (and biting) description of the pope's poor economics.

I interpreted Cowen's use of conservative as meaning that the Vatican doesn't want to stray too far from tried and true positions, not necessarily to mean politically right-leaning. With that context, it seems to fit fairly well.

Cowen did not say that the Pope is fundamentally conservative, but that the work is. The encyclical is not blatantly anti-globalization, anti-market, or anti-business - it is a "safe" work that seeks to address all concerns, but in the end is can best be described as pro-establishment. What else would you expect from the Vatican, which embodies the ancien regime perhaps more than any other institution..

Obama, as an American president, is conservative in the world context just because of his position, not personal ideology. Obama is unlikely to push for, say, the elimination of the WTO or the end of multinational corporations. Cowen rightly suggests that the Vatican is unlikely to take radical anti-establishment views, which seems like a safe assumption to me.

What else would you expect from the Vatican, which embodies the ancien regime perhaps more than any other institution.

You know that "ancien regime" either refers specifically to the social order of pre-1789 France, or generally to some order that no longer exists, right?

And you realize that the point of this whole discussion is that the Vatican seems comfortable with the current global capitalist setup, which would basically horrify not just the old French kings, but even the bien pensants of the 1950s, such as Galbraith, with its radical novelty, right? And that therefore there's no conceivable way to label the current setup an "ancien regime".

"You know that "ancien regime" either refers specifically to the social order of pre-1789 France, or generally to some order that no longer exists, right?"

Uncapitalized, it refers generally. And not to a regime that no longer exists, but one that no longer rules - and yes this applies to the Vatican. However, they would like to remain relevant, and in order to do so they are careful to pick their battles.

In this case, I was referring to the unsurprising nature that the Vatican supports the currently powerful and is careful not to step on the toes of the political class, while at the same time pandering to the world's poor with nonsense and using a lot of anti-market rhetoric.

I don't see the Vatican's letter as immensely in favor of global capitalism and free markets, but instead in favor of the existing order. "Fundamentally conservative" is a good word. If you read the letter, you will see some obvious concern about the supposed deleterious effects of unconstrained globalization, particularly the cultural effects. And of course there are obligatory calls for a cultural renaissance, and a condemnation of the global capitalist culture of "greed," etc.

By the way, George, why did you feel the need to take a derisive tone?

I read the encyclical and found it very vague except when commenting on extremes. It seems the Pope doesn't want to hurt the feelings of anyone but extremists. Cowen's comments seem to be in the same vein. He wants to write something without saying anything.

The encyclical is not vague in the least.
I think where the discussion is lost is in the terminology. Terms such as Truth, Love, Charity and Subsidiarity take on a different meaning to the Church.

In fact, Pope Benedict XVI begins the encyclical by trying to give a definition to the words above. Subsidiarity is a Christian concept on limited government and personal liberty.
By stressing a world of subsidiarity they are stressing that individual's act and it is their actions that matter.
The Pope stresses this by quoting Pope Paul VI, "every man is called upon to develop and fulfill himself, for every life is a vocation." (16)
He goes on to say it is the vocation that will help economies develop.

Does this not relate to Mises in Human Action ,"In any real and living economy every actor is always an entrepreneur"? (p 252)

David, by taking Tyler’s words out of context you have obscured his point. His comment about the pope standing not too far to Obama’s left is a tongue-in-cheek dismissal of E. J. Dione’s hyperbole (that the pope is “well to Obama’s left on economic matters”). Still, prevailing opinion does place the pope – along with nearly all of the elected politicians in Europe – to Obama’s left and Tyler’s article undermines that notion.

I wrote this in response at Marginal Revolution, but I think I missed the time cut off.

I think it helps to be Catholic to understand the document. The allusion to Hegel was not inappropriate. The Pope is, after all, among other things, a German philosopher!

One of the things I really enjoy about reading econ blogs, as a psychiatrist, is watching economists struggle with psychology, sociology, anthropology, and other disciplines as I struggle to learn economics. In some of the discussions, for example, I was interested to find out (please forgive the oversimplification or misunderstanding of an outsider) that some economists had no room in their models for cognitive error, assuming an omniscience within the marketplace. Behavioral economics, if I understand what I'm reading, tries to take such cognitive limitations into account.

Any particular discipline naturally possesses shortcomings in its worldview, according to which part of the elephant it is grabbing. The Holy Father points out that the marketplace is a necessary construct, but that it is unable, in itself, to solve some of its most significant problems. Hence the need not only for laws, regulations, and ethics, but also for love and trust. When we consider what Bernard Madoff really cost the world, this loss of trust far outstrips the loss in dollars. No "blueprint" could prevent a Madoff, but that should not keep us from reflecting upon the values which can direct us, individually and communally from following in his path, even in small steps.

One of the joys (and challenges) of the interdisciplinary exchange Benedict extols stems from having to confront paradox. For the Catholic mind, the "invisible hand" of Adam Smith represents such a puzzle. It seems quite strange that the pursuit of apparent selfishness leads to such benefits. Yet we must admit that systems based on altruism caused peoples to fare much worse, both materially and in the loss of freedom. Perhaps we Catholics should not be so puzzled-God has brought forth good from evil since the beginning of history.

Economics too must face uncomfortable truths. Though fascinating, it's a limited discipline. Guided by truth and charity, it's a useful tool in promoting human development in the full sense that Benedict prays for us to achieve.

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